Power networks are undergoing a fundamental transition, with traditionally passive consumers becoming 'prosumers' -proactive consumers with distributed energy resources, actively managing their consumption, production and storage of energy. A key question that remains unresolved is, how can we incentivise coordination between vast numbers of distributed energy resources, each with different owners and characteristics? Virtual power plants and peer-to-peer energy trading offer different sources of value to prosumers and the power network and have been proposed as different potential structures for future prosumer electricity markets. In this Perspective, we argue they can be combined to capture the benefits of both. We thus propose the concept of the federated power plant, a virtual power plant formed through peer-to-peer transactions between self-organising prosumers. This addresses social, institutional and economic issues faced by top-down strategies for coordinating virtual power plants, while unlocking additional value for peer-to-peer energy trading.

This paper proposes bilateral contract networks as a new scalable market design for peer-to-peer energy trading. Coordinating small-scale distributed energy resources to shape overall demand could offer significant value to power systems, by alleviating the need for investments in upstream generation and transmission infrastructure, increasing network efficiency and increasing energy security. However, incentivising coordination between the owners of large-scale and smallscale energy resources at different levels of the power system remains an unsolved challenge. This paper introduces real-time and forward markets, consisting of energy contracts offered between generators with fuel-based sources, suppliers acting as intermediaries and consumers with inflexible loads, timecoupled flexible loads and/or renewable sources. For each type of agent, utility-maximising preferences for real-time contracts and forward contracts are derived. It is shown that these preferences satisfy full substitutability conditions essential for establishing the existence of a stable outcome-an agreed network of contracts specifying energy trades and prices, which agents do not wish to mutually deviate from. Important characteristics of energy trading are incorporated, including upstream-downstream energy balance and forward market uncertainty. Full substitutability ensures a distributed price-adjustment process can be used, which only requires local agent decisions and agent-to-agent communication between trading partners.

This paper proposes a peer-to-peer energy market platform based on the new concept of multi-class energy management, to coordinate trading between prosumers with heterogeneous (i.e. beyond purely financial) preferences. Power networks are undergoing a fundamental transition, with traditionally passive distribution network consumers becoming 'prosumers'; proactive consumers that actively manage their production and consumption of energy. The paper introduces the new concept of energy classes, allowing energy to be treated as a heterogeneous product, based on attributes of its source which are perceived by prosumers to have value. Examples include generation technology, location in the network and owner's reputation. The proposed peer-to-peer energy market platform coordinates trading between subscribed prosumers and the wholesale electricity market, to minimise costs associated with losses and battery depreciation, while providing added value by accounting for the prosumers' individual preferences for the source/destination of the energy they consume/produce. The decomposable structure of the multi-class energy management problem is exploited to devise a distributed price-directed optimisation mechanism, providing scalability and prosumer data privacy. Receding horizon model predictive control allows the prosumers to adjust their planned power flows based on the wholesale energy price, and up-to-date renewable generation and load predictions.

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